Transactional Funding Concerns

[Eli Rozansky]

I have been in the transactional funding business for some time now and have seen the great success it can bring people. For those of you who don't know, transactional funding provides 100% of the loan to cost on investment flip properties and is generally only lent for 24 to 48 hours. These properties often are short sales and reo's, and occasionally wholesale deals.

I have noticed over my time in the industry that many people are weary of these types of lenders and are sometimes afraid to use these services. Being in the industry, I wanted to start a thread regarding any concerns investors have using this service as well as any questions people may have about how to use them. Those are my starting topics but feel free to take this wherever you all see valuable.

[Eric M.]

I am a Transactional lender and frankly, I have never run across any real concerns from investors about Trans Funding, except maybe the cost.
They are typically well acquainted with it and love the concept. (who doesn't love 100% financing?) It is pretty straightforward, low risk, fast and easy.

The one thing I would mention is the confusion between 1-2 day Transactional Funding and 30+ day versions of it that some people still call Transactional, but I refer to as Seasoning Funding.
Investors often seem to be under the impression that 30 day funding should be just as available and priced the same as 1 day. But in reality they are totally different animals.
30+ day versions of Trans Funding may look the same on the surface but from a risk perspective, they are very different for a lender. That is why you are seeing VERY FEW lenders offering the longer term versions anymore.
Lending 100% on a property when the B-C has 4 long weeks to fall apart is a recipe for disaster and lenders are just not going to do it. Or they won't be doing it for long!
Some of us are trying to create programs to deal with this demand for 30 days but it is not a simple deal. I just want investors to understand those differences.